United States Of America et al v. Avalign Technologies, Inc. et al

Filing 68

OPINION & ORDER: re: 25 MOTION for Attorney Fees and Expenses filed by ex rel. Mary Bixler Wood. For the foregoing reasons, Relator's motion for attorney's fees and costs is GRANTED in part and DENIED in part. The Court will award Relator a total of 1,493,290 in attorney's fees and $2,792.13 in costs. The Clerk of Court is respectfully directed to terminate the motion, Doc. 25. It is SO ORDERED. (Signed by Judge Edgardo Ramos on 5/20/2020) (ama)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA ex
rel. MARY BIXLER WOOD, et al.,
Plaintiffs,
– against –
AVALIGN TECHNOLOGIES, INC.,
INSTRUMED INTERNATIONAL,
INC., INSTRUMED GMBH,
NEMCOMED FW, LLC,
NGINSTRUMENTS, INC., ADVANTIS
MEDICAL, INC., ROUNDTABLE
HEALTHCARE PARTNERS, L.P.,
CAREFUSION CORPORATION, and
DE PUY SYNTHES, INC.,

OPINION & ORDER
14 Civ. 4958 (ER)

Defendants.
RAMOS, D.J.:
Relator Mary Bixler Wood filed this qui tam action under seal on July 2, 2014 on
behalf of the United States of America; the States of California, Colorado, Connecticut,
Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland,
Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico,
New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Utah,
Washington, and Wisconsin; the Commonwealths of Massachusetts and Virginia; and the
District of Columbia. Doc. 19. Relator brought claims under the False Claims Act (the
“FCA”) and its state counterparts against Avalign Technologies, Inc. (“Avalign”),
Instrumed International, Inc. (“Instrumed”) (together, the “Avalign Defendants”),
Instrumed GmbH, Nemcomed FW, LLC, NGInstruments, Inc., Advantis Medical, Inc.,
RoundTable Healthcare Partners, L.P., CareFusion Corporation (“CareFusion”), and
DePuy Synthes, Inc., alleging that they illegal marketed medical devices never cleared
for use by the U.S. Food and Drug Administration (the “FDA”) in violation of the Food,

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Drug, and Cosmetic Act (the “FDCA”), and that federal and state healthcare programs
then improperly reimbursed procedures using these devices. Id.
Before the Court is Relator’s motion pursuant to Federal Rule of Civil Procedure
54(d)(2) for an award of attorney’s fees and expenses following settlements with
CareFusion and the Avalign Defendants (collectively, “Defendants”).1 Doc. 25. For the
following reasons, the motion is GRANTED in part and DENIED in part.
I.

BACKGROUND
Statutory Background
3e FCA
ce FCA prohibits any person from “knowingly present[ing], or caus[ing] to be

presented, a false or fraudulent claim for payment or approval,” as well as “knowingly
mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement material to
a false or fraudulent claim.” 31 U.S.C.§ 3729(a)(1)(A)–(B). ce Attorney General is
responsible for investigating violations of the FCA and may bring a civil action if it has
been violated. Id. § 3730(a). However, the FCA also allows private parties (“relators”)
to “bring a civil action for a violation of section 3729 for the person and for the United
States Government.” Id. § 3730(b)(1). cis is known as a qui tam action. ce
Government may, in turn, “elect to intervene and proceed with the action.” Id. §
3730(b)(2). If it does, “it shall have the primary responsibility for prosecuting the
action,” and has the authority to “dismiss the action notwithstanding the objections of the
person initiating the action,” including to settle the action. Id. § 3730(c)(1)–(2)(B). If the
Government declines to intervene, relators “shall have the right to conduct the action.”
Id. § 3730(b)(4)(B).
In cases where the Government intervenes and prevails on one or more of the
claims, the relator may “receive at least 15 percent but not more than 25 percent of the

1

cough Instrumed GmbH is a subsidiary of Instrumed, Doc. 19 ¶ 12, it did not participate in the
settlement, Doc. 23.

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proceeds of the action or settlement of the claim, depending upon the extent to which the
person substantially contributed to the prosecution of the action.” Id. § 3730(d)(1).
Relator “shall also receive an amount for reasonable expenses which the court finds to
have been necessarily incurred, plus reasonable attorneys’ fees and costs,” for successful
claims. Id; United States ex rel. Mikes v. Straus, 274 F.3d 687, 705 (2d Cir. 2001) (citing
Hensley v. Eckerhart, 461 U.S. 424, 434–35 (1983), abrogated on other grounds by Univ.
Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016).
3e FDCA
When it was first enacted, the FDCA, 21 U.S.C. § 301 et seq. required FDA
approval for the introduction of new drugs into the market, but largely left the regulation
of medical devices to the States. See Riegel v. Medtronic, Inc., 552 U.S. 312, 315 (2008).
However, as devices grew more complex, Congress changed this scheme with the
Medical Device Amendments of 1976 (the “MDA”), 21 U.S.C. § 360c et seq., which
established various levels of federal oversight for devices depending on the level of level
of risk they posed.
Under the MDA, certain medical devices require approval or clearance by the
FDA before they can be marketed in the United States. cis approval or clearance may
take several forms. Generally, to provide “reasonable assurance” that the device is both
safe and effective, the device must undergo the premarket approval (the “PMA”) process.
Id. § 360e(d)(2). However, there are two exceptions to this requirement. ce first is a
provision that “grandfathers” certain devices that were already on the market before
1976. Id. § 360e(b)(1)(A). ce second, is a provision that allows devices to avoid the
PMA process if they are “substantially equivalent” to one of these grandfathered devices.
Id. § 360e(b)(1)(B). ce process of reviewing these “substantially equivalent” devices is
known as § 510(k) review because it is governed by section 510(k) of the FDCA.
Section 510(k) clearance is required before a relevant device is introduced into interstate
commerce for the first time, before making a change or modification to an already cleared
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device that “could significantly affect safety or effectiveness,” or before making a major
change or modification to the intended use of a previously § 510(k)-cleared device. 21
C.F.R. § 807.81(a); 21 U.S.C. § 360(k). Failure to do so results in an adulterated and
misbranded product, and marketing such a device is prohibited under federal law. See,
e.g., 21 U.S.C. §§ 331(p), 351(f), 352(o).
ce FDCA and its implementing regulations impose many other requirements on
medical devices marketed in interstate commerce. cese include, among others, quality
controls in accordance with current good manufacturing practices, see, e.g., 21 C.F.R.
§ 820; labeling requirements, see, e.g., id. § 801; and post-marketing obligations,
including medical device reporting requirements, see, e.g., id. § 803. Failure to comply
with any of these requirements may result in the relevant devices being considered
“adulterated,” 21 U.S.C. § 351, or “misbranded,” id. § 352.
None of the major federal healthcare programs, including Medicare, Medicaid,
TRICARE, and CHAMPVA, provide for reimbursement for the purchase or use of
medical devices that lack required § 510(k) approval or that are otherwise adulterated or
misbranded.
=e Original Complaint and the CareFusion and Avalign Defendants
Relator, previously the Vice President of Quality and Regulatory Affairs for
Avalign from February 2010 until her employment was terminated in July 2013, Doc. 19
¶ 9, filed the original complaint under seal on July 2, 2014. Doc. 19. In it, she alleged
that nine defendants knowingly sold thousands of medical devices that had never been
cleared for use by the FDA to providers around the country. Id. cese providers
subsequently billed Medicare and other federal and state healthcare programs for
procedures using these illegal devices in violation of program rules. Id. ce complaint
alleged thirty-four counts—three counts alleging violations of the FCA, and thirty-one
alleging violations of corresponding state laws—and included numerous theories of
noncompliance and liability for all of the defendants. Id.
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As is relevant to the instant motion, Relator alleged eight overarching theories of
liability against the Avalign Defendants. In particular, she alleged that Avalign, a
manufacturer of medical devices, had:
(1) Marketed medical devices without § 510(k) clearance, id. ¶¶ 81–
101;
(2) Failed to implement design controls required by Quality System
Regulations (QSR), id. ¶¶ 102–111;
(3) Failed to implement purchasing controls required by QSR, id. ¶¶
112–125;
(4) Failed to comply with production phase quality requirements, id.
¶¶ 126–157;
(5) Failed to meet labeling requirements, id. ¶¶ 158–170;
(6) Failed to follow proper complaint handling procedures, id. ¶¶
171–181;
(7) Failed to file medical device reporting submissions, id. ¶¶ 182–
190; and
(8) Committed various other QSR violations, id. ¶¶ 191–205.
With regards to the § 510(k) allegations, Relator alleged that Instrumed, a subsidiary of
Avalign, failed to obtain clearance for certain devices in the following four ways: (1) it
lacked a documented basis for legally marketing approximately two-thirds of its nearly
30,000 finished devices and components, id. ¶ 86; (2) it falsely claimed that a significant
number of devices were covered by § 510(k) clearances that did not, in fact, support
those devices, id. ¶ 87; (3) it marketed numerous devices requiring § 510(k) clearance
based on the false premise that the devices qualified as preamendment, id. ¶¶ 88–90; and
(4) it marketed multiple devices that had been significantly changed, in design or in
intended use, from § 510(k)-cleared or preamendment versions, id. ¶¶ 91–95.
Relator’s § 510(k) claims against CareFusion, a purchaser of Instrumed products,
largely relate to her claims against Instrumed. Specifically, Relator alleged that
CareFusion “knew that Instrumed was distributing devices without required § 510(k)
clearance or evidence of preamendment status.” Id. ¶ 209.

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ce United States partially intervened on August 9, 2019, by which time several
states had already intervened. Its intervention was limited to one theory of liability: that
Instrumed had sold certain medical devices which it claimed qualified as pre-amendment
devices, but which it knew could not qualify as such. Docs. 21, 22 ¶¶ 41–65. ce
Government declined to intervene with respect to the remainder of Relator’s theories of
liability, including the remainder of her § 510(k) allegations against the Avalign
Defendants.2
ce Government’s involvement resulted in two settlements, both of which were
limited to the single claim in which it chose to intervene and were not based on the
balance of Relator’s other theories of liability against these and other defendants. Prior to
its intervention, the Government entered into a settlement agreement with CareFusion for
$2,821,539.92. ce basis of this settlement was that “CareFusion purchased devices from
Instrumed that Instrumed wrongly claimed qualified for the pre-amendment status
exception, and then sold those devices to hospitals and other health care providers.” Doc.
38, Ex. A ¶ 2(d). Upon entering into its settlement agreement, CareFusion obtained a
release from the United States, the individual state intervenors, and the Relator. Id. ¶¶ 5–
7. It entered into a similar agreement with the states. cen, on the same day that it
intervened, the Government entered into a Stipulation and Order of Settlement (the
“Settlement Agreement”) with the Avalign Defendants for $8,128,440.60, plus annual
interest. Doc. 23. ce Government awarded Relator a 21% share of these two
settlements. Do. 26 at 8.
Relator subsequently amended her complaint, dropping some defendants and
claims. Doc. 36. Defendants continue to contest all of the non-settled claims.

2

ce complaint is unclear as to whether these theories relate to the same medical devices.

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Relator’s Application for Fees and Costs
Having succeeded on one of her claims, Relator moved for an award of attorney’s
fees and costs on November 22, 2019 pursuant to Federal Rule of Civil Procedure
54(d)(2). Doc. 25. Relator seeks $2,225,690 in attorney’s fees for a total of 3,333.1
hours worked, and $4,188.19 in costs. ce attorney’s fees can be further broken down
into $1,779,615 in common fees,3 $420,600 in fees specific to the Avalign Defendants,
and $144,525 in fees specific to CareFusion. Doc. 27, Ex. 3. Relator also requests an
additional $27,840 spent in preparing this motion. Doc. 47 ¶ 14.
Relator requests that the court grant an hourly billing rate of $800 for partners,
$500 for senior associates, $400 for associates, and $100–$150 for paralegals and
litigation support staff. Doc. 26 at 11–14. Relator has provided a summary of her
counsel’s qualifications and experience, as well as contemporaneous timesheets of the
time for which she is seeking compensation. Docs. 27–28. In summary, relator’s legal
team was headed by Brian M. Feldman, a former Assistant United States Attorney, and
retired Magistrate Judge Carol E. Heckman of the law firm Harter Secrest & Emery LLP
(“HSE”), as well as by Stephen D. Terman, a former FDA lawyer, and J. Mason Weeda of
the law firm Olsson Frank Weeda Terman Matz PC (“OFW”). Mr. Feldman is a partner
at HSE, where he chairs the Government and Internal Investigations practice group and
regularly handles FCA cases. Doc. 27 ¶¶ 3–6. Judge Heckman was also a partner at HSE
during her time on this case, and is now a partner at the law firm of Lippes Mathias
Wexler Freidman LLP. Id. ¶¶ 7–9. Mr. Terman and Mr. Weeda are principal partners at
OFW with extensive experience in FDA law and regulatory issues. Doc. 28 ¶¶ 3–11.
Several other attorneys from both firms also participated in the case. According to
Relator, the fees she seeks are in keeping with HSE’s national billing rates, Doc. 47 ¶ 3,
and with Mr. Terman’s customary hourly billing rate, Doc. 48 ¶ 2. HSE is based in

3

cese are fees for which Relator alleges CareFusion and the Avalign Defendants are joint and severally
liable.

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Rochester, with additional offices in Albany, Buffalo, Corning, and New York City; and
OFW is based in Washington, DC.
Mr. Feldman and Mr. Weeda prepared the spreadsheets tabulating time entries for
their respective firms. In preparing the fee application, Mr. Feldman purports to have
“exclude[d] time that [he] would not typically charge to a paying client,” Doc. 27 ¶ 32, as
well as “any entries that did not relate to the effort to advance the investigation and
litigation against CareFusion or Avalign,” id. ¶ 33, and “billing entries that related
exclusively to efforts to advance the prosecution of claims that were declined by the
Government and/or otherwise not settled with either CareFusion or Avalign,” id. ¶ 35.
He avers that “[a]fter other write-offs, and after excluding work involving investigation
of other defendants (i.e., neither CareFusion nor Avalign), I identified and excluded an
additional amount of more than $119,000 in billing entries that appeared to relate
exclusively to declined and/or non-settled claims against CareFusion or Avalign.” Id. In
his sworn affidavit, Mr. Weeda similarly reports having excluded hours that were not
related to the effort to prosecute the settled claims against CareFusion or the Avalign
Defendants. Doc. 28 ¶¶ 22–25.
II.

LEGAL STANDARD
Federal Rule of Civil Procedure 54(d)(2)(A) provides, in relevant part, that “[a]

claim for attorney’s fees and related nontaxable expenses must be made by motion.”
Such a motion must be filed within fourteen days after the entry of judgment, must
specify the judgment and rule entitling the movant to the award, must state the amount
sought or provide a fair estimate, and must disclose, if the court so orders, “the terms of
any agreement about fees for the services for which the claim is made.” Fed. R. Civ. P.
54(d)(2)(B). “ce court must find the facts and state its conclusions of law,” with regard
to the application. Id. 54(d)(2)(C).
Under the FCA, “a successful qui tam plaintiff shall receive reasonable attorneys’
fees and costs.” United States ex rel. Keshner v. Nursing Personnel Home Care, 794 F.3d
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232, 237 (2d Cir. 2015) (internal quotation marks omitted) (quoting 31 U.S.C. §
3730(d)(1)). “ce essential goal in shifting fees . . . is to do rough justice, not to achieve
auditing perfection.” Fox v. Vice, 563 U.S. 826, 838 (2011). To determine what
constitutes a “reasonable fee,” courts begin by looking to the lodestar, “the product of a
reasonable hourly rate and the reasonable number of hours required by the case.” Millea
v. Metro-North R. Co., 658 F.3d 154, 166 (2d Cir. 2011). cis creates a “presumptively
reasonable fee.” Arbor Hill Concerned Citizens Neighborhood Assoc. v. Cnty. of Albany,
522 F.3d 182, 183 (2d Cir. 2008). “A detailed explanation of the lodestar calculation is
unnecessary, but . . . the district court should at least provide the number of hours and
hourly rate it used to produce the lodestar figure.” Millea, 658 F.3d at 166–67.
“Moreover, a court is not obligated to undertake a line-by-line review of the fee
application, but may instead exercise its discretion and use a percentage deduction as a
practical means of trimming fat.” Kortright Capital Partners LP v. Investcorp Inv. v.
Advisers Ltd., 392 F. Supp. 3d 382, 406–407 (S.D.N.Y. 2019) (internal quotation marks
and citation omitted). “While there is a strong presumption that [the lodestar] represents
a reasonable fee, it may be adjusted upward or downward based on other considerations.”
Cowan v. Ernest Codelia, P.C., No. 98 Civ. 5548 (JGK) (JF), 2001 WL 30501, at *7
(S.D.N.Y. Jan. 12, 2001) (citing Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir.
1999)). However, this is only permissible in “rare circumstances,” and “[f]actors that are
already subsumed in the lodestar calculation cannot be used to enhance or cut the lodestar
amount.” Lilly v. City of New York, 934 F.3d 222, 231 (2d Cir. 2019) (internal quotation
marks and citations omitted).
III.

DISCUSSION
Relator seeks a total of: $2,225,690 in attorney’s fees and $4,188.19 in costs in

connection with procuring the settlements against CareFusion and the Avalign
Defendants, and an additional $27,840 in fees incurred in preparing Relator’s fee
application. ce attorney’s fees can be further broken down into $1,779,615 in common
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fees, $420,600 in fees specific to the Avalign Defendants, and $144,525 in fees specific to
CareFusion. Doc. 27, Ex. 3. For the reasons stated below, Relator’s request is
GRANTED in part and DENIED in part.
Fees and Costs in Connection with the Settlements
Both CareFusion and the Avalign Defendants object to the fees sought by Relator.
CareFusion raises objections to: (1) the hourly rate sought by Relator’s counsel; (2) the
use of block billing and the overuse of redactions4; (3) payment sought for time spent
negotiating her share of the settlement proceeds with the United States, as well as for
pursuing state law claims and for travel; and (4) the CareFusion-specific fees, insofar as
they cannot be readily attributed to CareFusion and are also replete with block billing,
vagueness, and redactions. It argues that the Court should only award fees that pertain to
the one claim in which the United States chose to intervene and which gave rise to the
two settlements—that is, the § 510(k) claim that the Avalign Defendants had sold certain
medical devices as pre-amendment devices when it knew this was not the case, and that
CareFusion knowingly purchased these devices—resulting in a fee that is only 12.5% (or,
one-eighth) of the fee Relator demands. It further argues that the Court should utilize
counsel’s customary hourly rates, resulting in a further 47% reduction; reduce the fee by
another 10% to account for block billing; and subtract $7,950 recorded in connection
with Relator’s negotiation of her share of the settlement proceeds. In short, it asks the
Court to reduce Relator’s common fee award to a total of $98,683.06, and its CareFusionspecific fee award to $8,617.30. ce Avalign Defendants similarly request that the fee
demand be reduced by 90 percent so as to reflect the limited scope of Relator’s success
and “to account for the Application’s other deficiencies, including its reliance on vague
and/or block-billed descriptions of the work performed; requests for fees that plainly

4

Relators, in turn, maintain that these entries have been redacted for privilege. Doc. 46 at 9.

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relate to non-settled claims, non-settling defendants, and non-settled products; and
exaggerated hourly rates.” Doc. 39 at 2.
ce Court will consider each of these arguments in turn.
Reasonable Hourly Rate
Relator’s counsel seeks an hourly rate of $800 for partners, $500 for senior
associates, $400 for associates, and $100–$150 for paralegals and litigation support staff.
Defendants argue that these rates are unreasonable because of “compelling evidence” that
these are much higher than the customary rates charged by the two law firms involved,
which are based outside of the Southern District (HSE is based in Rochester, with
additional offices in Albany, Buffalo, Corning, and New York City; and OFW is based in
Washington, DC). Doc. 37 at 12–14. cey also argue that the Court should consider
counsel’s contingency fee arrangement.5 Id. at 13. To ignore these factors would, they
argue, result in a “windfall.” Id. (citing United States v. Am. Univ. of Beirut, No. 14 Civ.
6899 (JPO), 2017 WL 3588647, at *1 (S.D.N.Y. Aug. 17, 2017).
In the Second Circuit, the so-called “forum rule” establishes a rebuttable
presumption that “courts should generally use the hourly rates employed in the district in
which the reviewing court sits in calculating a presumptively reasonable fee.” Simmons
v. New York City Transit Auth., 575 F.3d 170, 174 (2d Cir. 2009) (internal quotation
marks and citations omitted). However, “a district court may use an out-of-district hourly
rate—or some rate in between the out of district rate sought and the rates charged by local
attorneys—in calculating the presumptively reasonable fee if it is clear that a reasonable,
paying client would have paid those higher rates.” Arbor Hill, 522 F.3d at 191. In
determining a reasonable hourly rate, a district court should consider “all pertinent

5

Although the record is silent as to whether any such contingency fee arrangement exists or what its
particulars are, CareFusion posits that “it is common in qui tam matters for a relator’s counsel to work on a
contingency basis . . . . Assuming a contingency fee arrangement in this case of between 33% and 50%,
Relator’s counsel likely already have received compensation in the range of $900,000 to $1.35 million.”
Doc. 37 at 13.

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factors,” including the so-called Johnson factors. Lilly, 934 F.3d at 230. ce Johnson
factors include:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the level of skill required to perform the legal service
properly; (4) the preclusion of employment by the attorney due to
acceptance of the case; (5) the attorney’s customary hourly rate; (6)
whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in
the case and the results obtained; (9) the experience, reputation, and
ability of the attorneys; (10) the “undesirability” of the case; (11) the
nature and length of the professional relationship with the client; and
(12)
awards
in
similar
cases.
Arbor Hill, 522 F.3d at 186 n.3 (citing Johnson v. Ga. Highway Exp., Inc., 488 F.2d 714,
717–19 (5th Cir. 1974)). District courts should also consider that “a reasonable, paying
client wishes to spend the minimum necessary to litigate the case effectively . . . [and]
that such an individual might be able to negotiate with his or her attorneys, using their
desire to obtain the reputational benefits that might accrue from being associated with the
case.” Id. at 190.
ce Second Circuit has not squarely addressed the application of the forum rule to
out-of-district attorneys who seek higher Southern District rates simply because of where
the action was filed. However, it is not unusual for courts in this Circuit to award lower
hourly rates than the hourly rates prevailing in the district where the district court sits.
See Arbor Hill, 522 F.3d at 193 n.8 (discussing Crescent Publ’g Grp. Inc. v. Playboy
Enters., Inc., 246 F.3d 142, 151 (2d Cir. 2001) and collecting cases); see also Am. Univ.
of Beirut, 2017 WL 3588647, at *1 (“Courts have previously questioned the wisdom and
fairness of utilizing a prevailing rate that differs on average by more than $100.00 per
hour depending on which side of the Brooklyn Bridge the court sits.” (internal quotation
marks and citation omitted)). Based on this logic, CareFusion requests that “the Court . .
. apply hourly rates similar to those disclosed by the HSE Firm in its public filings—
$420/hour for partners, $250/hour for senior associates, $225/hour for associates, and

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$125/hour for paralegals.” Doc. 37 at 14. But the Johnson factors counsel a different
result here. In Reply, Relators’ counsel has submitted affirmations establishing that their
national billing rates are in keeping with the rates sought for this action. See Docs. 47–
48. And comparable rates have been awarded in this district for similar cases. See, e.g.,
U.S., ex rel. Fox Rx, Inc. v. Omnicare, Inc., No. 12 Civ. 275 (DLC), 2015 WL 1726474, at
*2 (S.D.N.Y. Apr. 15, 2015) (approving rate of $836/hour for partners, $631.75/hour for
eighth-year associate, and $541.50/hour for fourth-year associate in FCA case);
TufAmerica Inc. v. Diamond, No. 12 Civ. 3529 (AJN), 2016 WL 1029553, at *6
(S.D.N.Y. Mar. 9, 2016) (“Recent cases in this district suggest that the prevailing rate for
paralegals is between $100 and $200 per hour). Neither does the presence of a
contingency arrangement warrant lower fees. See e.g., United States ex rel. Bisk v.
Westchester Med. Ctr., No. 06 Civ. 15296 (LAK) (FM), 2016 WL 8254797, at *4 n.10
(S.D.N.Y. Aug. 5, 2016) (finding that contingency fee arrangement did not impact
statutory obligation to pay reasonable attorney’s fees). While CareFusion is correct that
“it is common in qui tam matters for a relator’s counsel to work on a contingency basis,”
Doc. 37 at 13, fees of this nature have been awarded in similar FCA matters, see, e.g.,
Fox Rx, Inc., 2015 WL 1726474, at *2.
ce Court therefore declines to depart from the forum rule, and will compute the
lodestar using the hourly rates proposed by Relator.
Number of Hours Worked
ce remainder of CareFusion’s and the Avalign Defendants’ objections are
essentially objections to the number of hours billed by Relator’s counsel. Specifically,
they object to being billed for hours spent negotiating Relator’s share of the settlement
proceeds and for hours spent on travel; and, critically, for hours spent pursuing
unsuccessful claims, claims against non-settling defendants, or state law claims.
Furthermore, the use of block billing and the overuse of redactions, they argue, makes it

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nearly impossible to parse out whether certain time entries actually relate to the
successful claim and/or to CareFusion or the Avalign Defendants.
a. Hours Spent Negotiating Award Share and on Travel
CareFusion and the Avalign Defendants argue that hours spent on negotiating the
settlement award share with the United States should be omitted. cey further argue that,
if the Court grants Relator’s counsel’s request for billing rates comparable to those in this
district, hours spent traveling to the District should be omitted. A “corollary” to the
forum rule “is that expenses and fees related to travel must be excluded from an award of
attorney’s fees.” United States ex rel. Feldman v. Van Gorp, No. 03 Civ. 8135 (WHP),
2011 WL 651829, at *3 (S.D.N.Y. Feb. 9, 2011). cis is because “the hypothetical
reasonable client who wishes to spend the least amount necessary to litigate the matter . .
. would have retained local counsel.” Id. (internal quotation marks omitted) (quoting
Imbeault v. Rick’s Cabaret Int’l, Inc., 08 Civ. 5458 (GEL), 2009 WL 2482134, at *8
(S.D.N.Y. Aug. 13, 2009). Moreover, “hours spent travelling by out-of-district attorneys
are not hours ‘reasonably expended’ where competent counsel is available within the
district.” Id. at *3 n.2.
Relator’s counsel has agreed to both of these requests. First, they have removed
$7,950 in fees for time spent negotiating Relator’s share of the settlement awards. cey
have also removed $36,000 for travel to and from New York City. 6 ce Court has
reviewed the billing records, as well as counsel’s explanation for how it arrived at the
$36,000 figure, and finds these amounts reasonable.
b. Hours Not Clearly Attributable to the Successful Claim
ce CareFusion and Avalign Defendants also argue that Relator’s counsel should
only be compensated for time spent pursuing the successful claim, and that the time
sheets submitted make it nearly impossible to determine whether this is what has
6

Relator has also omitted a time entry “that was not needed to succeed in this litigation and therefore
should not be included in this fee award motion,” resulting in a further deduction of $640. Doc. 46 at 10.

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occurred. Due in part to the inadequacy of these timesheets, CareFusion argues that
Relator should only be compensated for one-eighth of the time requested. It arrives at
this figure by noting that the complaint “asserted eight distinct and independent claims
against six Avalign-related defendants” and “[j]ust one of the eight claims also was
asserted against CareFusion,” which was also the subject of the settlement agreements.
Doc. 37 at 1. According to CareFusion, Relator’s fee application inappropriately
allocates “the vast majority of her fees incurred to date to the single claim that was
settled.” Id. at 2. Similarly, the Avalign Defendants aver that the application
inappropriately seeks 95 percent of total fees incurred in connection with this case, for a
claim that “comprised only three of the original Complaint’s 400-plus paragraphs and . . .
represented only one of dozens of distinct theories of liability.” Doc. 39 at 1. cey urge
the Court to reduce the fee demand “by at least 90 percent.” Id. at 2.
“[W]here a lawsuit presents ‘distinctly different claims for relief that are based on
different facts and legal theories’ the claims should be parsed out and attorneys’ fees
granted to a plaintiff only on successful claims.” Mikes, 274 F.3d 687, 705 (2d Cir. 2001)
(quoting Hensley, 461 U.S. at 434–35). cere is an exception however, if “successful and
unsuccessful claims were interrelated and required essentially the same proof,” such that
it is not possible to “separate by any rational means the portion of time occupied in
connection with the claims and defendants which did not survive.” Murphy v. Lynn, 118
F.3d 938, 952 (internal quotation marks and citation omitted). In other words, “[i]n
determining the number of hours reasonably expended for purposes of calculating the
lodestar, the district court should exclude excessive, redundant or otherwise unnecessary
hours, as well as hours dedicated to severable unsuccessful claims.” Quaratino, 166 F.3d
at 425 (citation omitted).
ce Court agrees that Relator’s time entries are deficient. In arriving at the
number of hours worked, counsel purports to have excluded “hours dedicated to
severable unsuccessful claims.” Doc. 46 at 4. To this end, Relator reports that counsel
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“subtracted and [did not] include[] any time spent exclusively on claims that have not
(yet, at least) been successful, such as the claims declined by the Government.” Doc. 26
at 15 (emphasis added). cis assertion, however, does little to assuage the Court. As the
Avalign Defendants point out, this strategy “effectively presume[s] that all fees are
recoverable unless the recorded time entries make clear that recovery is precluded.”
Doc. 39 at 18. cis is particularly a concern as it relates to time entries that appear to
commingle fees for work related to both the successful claim and the claims that are still
being litigated. See, e.g., Doc. 37, Ex. A at 21, 24, 32, 41.7 In general, counsel “should
maintain billing time records in a manner that will enable a reviewing court to identify
distinct claims.” Hensley, 461 U.S. at 437. Relator maintains that she only seeks fees for
the work needed to reach the settlements, even though that work may have
“simultaneously advanced other claims.” Doc. 46 at 6. However, given the imprecise
nature of numerous time entries, as well as some block billing, it is impossible for the
Court to determine whether such work did, indeed, advance the settlements. Nor has
Relator adequately explained how work done advancing other claims necessarily
contributed to the settlements. ce same issues exist with regard to state law claims, for
which Relator is not entitled to attorney’s fees. “[T]he fee applicant bears the burden of
establishing entitlement to an award and documenting the appropriate hours expended
and hourly rates.” Hensley, 461 U.S. at 437. Relator has not fully met that burden here.

7

In addition, the Avalign Defendants point to other categories of billing entries that are inappropriate,
including: (1) those related to labeling, (2) to brand products sold by defendants other than the Avalign
Defendants, (3) to claims that the Avalign Defendants may have violated import requirements, and (4) to
state law claims. Relator specifically objects only to the second of these, suggesting that these claims were
part-and-parcel of the settled claims. See Doc. 46 at 5–6 (claiming that “Avalign settled claims that it
illegally sold the non-cleared medical devices in Rider 1 of the settlement agreement, all of which were
recalled, and those recalls illustrate that each device was branded with a slew of company names”).
However, whether or not the Settlement Agreement included certain brand products, the time-entry, as
drafted, makes it impossible to determine whether these were Avalign sales or sales by other defendants.
Accordingly, the Court agrees that it is inappropriate to include time spent on these matters in calculating
the lodestar.

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But the Court disagrees with CareFusion and the Avalign Defendants that the
hours worked by Relator’s counsel should be reduced by either seven-eighths or ninety
percent. As Relator notes, it is highly unlikely that counsel spent equal amounts of time
on each theory. Relator has submitted that she should be compensated for 3,333.1 hours
of work. Doc. 27, Ex. 1. Of these, CareFusion8 has identified approximately 1102.2
hours that are not in dispute (including time entries that explicitly relate to the settled
claim, as well as entries that purport to relate to CareFusion-specific fees), accounting for
approximately $689,350 at counsel’s rates. Moreover, as discussed above, Relator has
agreed to omit time charged for travel, as well as time spent negotiating her share of the
settlement awards with the United States. cis accounts for a further 154.9 hours. In
total then, there remain 2,076 hours in dispute, accounting for approximately $1,417,380.
However, upon review of these disputed time entries, the Court finds that CareFusion has,
at times, been over-inclusive, and that at least some of these, particularly those after the
United States had determined to intervene in the case, are likely mostly attributable to
time spent working towards the settlements. ce Court will therefore deduct counsel’s
hours by half of this amount, or 1,038 hours, which accounts for about $708,690. cis is
slightly more than a thirty percent reduction in the total number of hours spent on this
litigation. ce Court finds that this is sufficient to “do rough justice.” Fox, 563 U.S. at
838.
c. Block Billing and Overuse of Redactions
CareFusion and the Avalign Defendants argue that a further deduction from the
fee award is necessary to account for block billing and the overuse of redactions.
However, the Court finds that its across-the-board deduction for time entries that did not
specifically indicate whether they relate to the successful claim already takes block
billing and redactions into account. It therefore declines this request.

8

ce Avalign Defendants have not submitted a comparable breakdown of disputed fees.

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Calculating the Lodestar
Having awarded counsel their rates sought, the Court calculates the lodestar by
(1) deducting $44,590 to account for time spent negotiating Relator’s share of the
settlement award, for travel time, and for time that Relator has voluntarily omitted; and
(2) reducing the fees sought by $708,690 to reflect a reduction of approximately 1,038
hours spent procuring the two settlements. cis results in a presumptively reasonable
lodestar of $1,472,410.9
Fees in Connection with this Application
Neither CareFusion nor the Avalign Defendants object to Relator’s request for
fees incurred in preparing the instant application. However, upon review of the
timesheets, which were submitted for the first time on Reply, the Court cannot justify the
$27,840 in fees sought. Several of the hours reported were spent by partners engaging in
tasks like redacting time entries and researching basic case law. Again, the Court cannot
determine precisely how many hours were spent performing these tasks because they
were block-billed. Yet tasks such as these may be more appropriately billed at the
associate level. ce Court has therefore reduced the requested fee by twenty-five percent
to account for this, resulting in an award of $20,880 in fees for the instant motion.

9

cis represents an approximately one-third reduction of Relator’s original request of $2,225,690. ce
Court will accordingly also reduce Relator’s requested costs by one-third, resulting in costs of $2,792.13.

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IV.

CONCLUSION
For the foregoing reasons, Relator’s motion for attorney’s fees and costs is

GRANTED in part and DENIED in part. ce Court will award Relator a total of
1,493,290 in attorney’s fees and $2,792.13 in costs. ce Clerk of Court is respectfully
directed to terminate the motion, Doc. 25.

It is SO ORDERED.
Dated:

May 20, 2020
New York, New York
EDGARDO RAMOS, U.S.D.J.

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